Investors are paying a huge premium to buy into the current crypto bull run via the publicly-traded Grayscale Bitcoin Investment Trust (GBTC).
The share price of GBTC is showing a premium of around 37% based on the amount of BTC in its reserves. This comes on the back of the firm’s announcement that its fund is now holding over $2 billion worth of crypto.
Grayscale shot past $2 billion in assets under management today https://t.co/B0WK2SgKHE— Barry Silbert (@barrysilbert) May 28, 2019
The flagship product currently trades at $11.44 per share, putting the price of Bitcoin above $11,600 – which is a premium of $3,000 per coin.
The publicly-traded Bitcoin fund has recently been pushing its “drop gold” campaign to try and persuade more people to invest in its crypto products. The firm provides some of the most widely-utilised crypto asset investment vehicles used by accredited and institutional investors to allow customers to invest in the crypto market in a strictly regulated and transparent environment.
The product works by allowing institutional investors to gain exposure to the price movement of the world’s leading cryptocurrency by using a traditional vehicle of investment. They don’t have to worry about storing, buying, or managing their private keys. This comes with the added bonus that shares can also be held in some US-based IRA and brokerage accounts.
‘Dumb’ Money Buying in?
Based on the current price of $11.44 per share in the trust, it works out that if an investor buys one full Bitcoin using GBTC, it would cost considerably over $11,000 due to the premium on the investment vehicle. Buying at this level of premium would most likely be labelled as ‘dumb’ money buying into the newly-christened bull market for BTC.
As the publicly-traded stock (available on US-based services like TD Ameritrade) most likely represents the easiest way for FOMO investors to quickly get some exposure, they can be safe in the knowledge that they may also be able to exit a short-term trade at a similarly high premium to the coins traded on popular and regulated exchanges like Coinbase, Gemini, or Kraken.